The confidence of Utah consumers shot this month to the highest level since April and may stay there for the rest of this year, boosted by a brighter hiring outlook, rising stock prices and improvements in the housing market — all of which are leading to stronger-than-expected spending.
Zions Bank said Tuesday that its Consumer Attitude Index increased to 85, a jump of 8.1 points from August. The reading is close to 90, a level that indicates a healthy economy.
“Consumer spending appears to be on the rebound (and) consumer debt has shrunk,” said Randy Shumway, CEO of The Cicero Group/Dan Jones and Associates, which prepares the monthly index. “It’s not just that we are seeing an elevation in consumer spending. Consumers’ debt load is such that they could borrow more money and spend more.
Nationally, the Conference Board said its Consumer Confidence Index rose to 70.3. That’s up from last month’s 61.3, which was revised higher. And it’s the highest reading since February, when the economy added 259,000 jobs and many thought business conditions were strengthening.
Both indexes are watched closely because consumer spending drives nearly 70 percent of economic activity. As in past months, they paint different portraits of consumer sentiment. In Utah, optimism about the economy — both now and in the next half-year — is considerably stronger than in other parts of the country. The U.S. index continues to suggest that conditions nationally are lagging. It hasn’t been near 90 since December 2007, when the Great Recession started.
U.S. consumer confidence has fallen five times in the past nine months. By contrast, Utah confidence has been steadier; it’s gone up six times since January. And with overall business conditions and hiring improving, Shumway believes the Utah index in October will be close to September’s reading and could stay elevated through the final three months of 2012.
Shumway’s survey showed consumers were highly optimistic about their outlook over the next six months. The future expectations component of the index increased 6 points, to 95.6. One in four people think more jobs will open up during the period, although near term confidence is more muted. The survey’s present situation component was 69.3 in September. Still, that was up 11.4 points from last month.
In one retail area — gourmet cupcake sales — consumer sentiment has remained upbeat and constant, said Leslie Fiet, owner of Mini’s Cupcakes in Salt Lake City. Despite the vagaries of the economy, customers continue to visit Fiet’s shops on 800 South, between State and Main streets, and at 1751 S. 1100 East in Sugar House.
“I have confidence in the fact that people are buying gourmet cupcakes, and not just going to [big-box stores]. That shows the consumer is willing to spend money on a higher-end product,” the former professional photographer said.
Although sales to her retail customers are holding up, corporate sales are down 10 percent to 15 percent this year. Fiet said some big employers have tightened their belts, and not just to save calories.
“Because the economy was really having issues last year, they’ve budgeted less money this year for food and treats. But based on what we see now, next year should be better,” she said.